NEGATIVE Demand Shock Gov't corrective intervention LRAS 51 LRAS SRAD1 SRAD3 SRAS SRAD2 SRAD2 SRAD1 SRAS SRAD2 SRAD3 0 SRAS SRAD2 Real GDP Real GDP 1) What kind of GAP exists (inflationary or recessionary)? 2) Which part of the FED's Congressional mandate (full employment or stable prices) does this situation trigger? 3) What kind of MONETARY policy might be helpful (increase or decrease money supply)? 4) What kind of FISCAL policy might be helpful (expansionary or contractionary)? 5) What specific FISCAL policy TOOLS can the government employ that would be helpful